On 12/20/2012 10:43 PM, Steve Kates wrote:
> Alberto Alesina. His empirical work demonstrates there is something to classical economic theory. You cannot get his results if reductions in public
> spending really do reduce the rate of growth



The Alesina paper you cite is at
http://link.springer.com/content/pdf/10.1007%2Fs11293-012-9337-z
I'll quote from the paper, which is a summary of recent empirical studies:

     "The range of the spending multiplier estimated using
     these various approaches is from .4 to 1.5, with some
     estimates even lower than .4 and some estimates larger
     than 1.5.  However, most fall in the .4 to 1.5 range."

The standard value for a "Classical" spending multiplier is 0.

Furthermore, Alesina's discussion of expansionary fiscal retrenchments
(rarely observed) turns in a quite Keynesian direction.  See for
example chapter 5 of the General Theory.

Separately, your discussion seems to conflate issues of long-run
growth with issues of short-run recovery, and you consistently
fail to recognize the possibility of government investment.

Keynes was not offering a model of growth in the contemporary
sense, however growth models in the Keynesian mold do exist.
Probably most famous in Hugh Rose's work in the 1960s, but there
is also an enormous neo-Kaleckian literature since the mid-1970s
(to which your momentary interlocutor Stephen Marglin has made
important contributions).

Cheers,
Alan Isaac